Wealth Manager - Essential news for investment professionals

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Ruffer dismisses Japan naysayers

Ruffer dismisses Japan naysayers

Steve Russell and Hamish Baillie, managers of the £317 million Ruffer investment trust, have argued that the case for Japanese equities has not been dented by the country’s consumption tax hike this month.

At the start of the month Japan increased the tax from 5% to 8%, the first rise in 17 years. The last time it jumped, in 1997, it was blamed for pushing the country into recession and the Japanese stock market into its lost decade.

The Ruffer pair, however, took heart from higher wages in the country. Salary negotiations are now concluding, and Russell and Baillie estimated that total pay would be up by 2-3% on average – the first growth in 15 years.

‘The naysayers will claim that the rise was too small to have a material impact on consumer psychology and change their propensity to save rather than spend,’ the duo accepted.

‘However, this is the first part of a long-term change of direction, and the effects of real wage growth when workers have seen their salaries decline for so long should not be underestimated.’

Baillie and Russell (pictured) continued: ‘There were also some fascinating insights into the pact between Abe and the corporate sector. Toshiba’s announcement of salary increases was accompanied by the statement, “With this agreement we aim to contribute to the creation of the virtuous economic circle advocated by the Japanese government”. This sort of unity greatly increases the chances of success for Abenomics.’

The Ruffer team also noted that dividends in Japan have hit record levels in absolute terms, with an average market yield of 1.8%.

‘This shows that companies are feeling more confident and shareholders are seeing the benefits of last year’s stellar corporate results,’ they contended, highlighting that Japanese profits surged by 54% in 2013.

Their investment trust currently has a 14% weighting to Japanese equities.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Play Tesco, Japan and the rise of the central banker

Tesco, Japan and the rise of the central banker

 Libby Ashby and leading wealth managers scrutinise the food retail sector, Japan’s consumption tax hike and political risk in the markets.

Your Business: Cover Star Club

Veteran banker boosts Sanlam’s stockbroking team

Veteran banker boosts Sanlam’s stockbroking team

A veteran private banker has been recruited by Sanlam Private Investments to strengthen its advisory stockbroking team.

Wealth Manager on Twitter